Jumbo Mortgage Loans are for buyers who need larger mortgages, such as for more expensive homes of up to $3 million. They are called “Jumbo Loans” because they are for amounts above the “conventional conforming” loan limits.
The limits are set by Fannie Mae and Freddie Mac, which set the limit on the maximum value of any individual mortgage they will purchase from a lender.
When the Fannie Mae and Freddie Mac limits don’t cover the full loan amount, the loans are referred to as a Jumbo Mortgage Loans. These limits are based on median home values for typical metropolitan areas, like greater Phoenix and Maricopa county.
The average interest rates on jumbo mortgages are typically higher than for conforming mortgages. Currently, the limit on a conforming loan is $417,000 for most of the US.
Remember that you’ll generally get a better rate and lower initial payments with an ARM loan; however, if you plan to keep the home beyond the initial fixed rate period of the loan, your rate and payments could increase.